Paying Workers Well Sparks Innovation

Paying workers well sparks innovation.

You don’t have to hang around corporate America for too long to hear a C-suite occupant extol the virtues of collaboration. Indeed, more and more executives hold that “profitability increases when workers are persuaded to collaborate more,” the New York Times Magazine reported last month.

You also hear plenty of business leaders talk up the importance of team spirit. “A willingness to help othersachieve their goals lies at the heart of effective collaboration, innovation, quality improvement, and service excellence,” researcher Adam Grant wrote in an article for the Harvard Business Review.

All of this sounds great, but how do companies create this healthy, profit-boosting collaboration? What are the ingredients?

Google has offered an answer. The search giant’s “data indicate[s] that psychological safety, more than anything else, was critical to making a team work,” according to theNew York Times Magazine report.

What, exactly, constitutes psychological safety? Harvard’s Amy Edmonson defines it as “a sense of confidence that the team will not embarrass, reject or punish someone for speaking up … a team climate characterized by interpersonal trust and mutual respect,” the Times wrote. And a Google employee noted that “[t]he behaviors that create psychological safety [include] conversational turn-taking and empathy.”

But in all of this feel-good talk about emotional intelligence, it’s all too easy to forget that decent living wages and the ability to afford to feed your family are necessary conditions for individuals to feel psychologically safe anywhere. American workers are certainly not excluded from these challenges.

Late last month, Yelp fired an employee who wrote on the Internet that she was going hungry due to low wages. When the Yelp worker wrote about her situation, the CEO of Yelp responded on Twitter that he understood that it was tough living in a high cost area like San Francisco. At the same time, he did not speak with her directly and demonstrated little empathy for her situation. To use Google’s phrasing, he did not exhibit any interest in “conversational turn-taking.”

Food insecurity (which Democracy reported has become agrowing problem on college campuses in addition to among the U.S. population at large) creates a lack of psychological safety. And a lack of empathy or desire to help only make matters worse.

Quartz reported last week that although “Olive Garden gives millions of meals to the needy,” it does not allow its own workers to eat the leftover food the restaurant would otherwise donate. Meanwhile, the article noted, “almosthalf the full-service restaurant workers and their families in the U.S.” depend on “public assistance programs” like food stamps.

Money anxieties are not confined to a small minority in the U.S. According to the most recent Stress in America survey by the American Psychological Association, “Seventy-two percent of adults report feeling stressed about money at least some of the time and 22 percent say that they experience extreme stress about money…. Thirty-two percent of adults say that their finances or lack of money prevent them from living a healthy lifestyle.”

A new study released last week shows how deadly stress can be. “Our study illuminates, for the first time, a relationship between … fear and stress–and subsequent heart disease events,” according to the study’s co-author, Ahmed Tawakol, co-director of the cardiac program at Massachusetts General Hospital.

Companies that tout the importance of collaboration but don’t first build a foundation of physical and emotional safety in the workplace are engaging in a fool’s errand. That’s why relatively recent moves by companies like American Airlines  AAL -0.89%  and Walmart  WMT -0.45%  to increase worker wages are so significant.

Last month, the Washington Post reported that many Americans naively underestimate the disparity between CEO and worker pay. Luckily, some CEOs who used to disregard the importance of this disparity are starting to realize the importance of worker pay to profitability, collaboration, innovation and all the other great sounding stuff that’s fun to talk about in public. The benefits are real. It’s now up to business leaders to act on that knowledge.

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://www.thevaluealliance.com), an independent board education and advisory firm she founded in 1999. She has been a regular contributor to Fortune since April 2010 and is the author of two books on corporate governance and valuation.